Advance payment deduction causes hardship

Where an advance payment deduction causes severe financial hardship due to a change in circumstances the pensioner can apply in writing to the Commission to have the rate of deduction reduced or stopped. This can only be approved if the delegate of the Commission is satisfied that:

• the pensioner's change in circumstances is exceptional and was unforeseen at the time of application for the advance payment, and
• the pensioner would suffer severe financial hardship if the repayment rate was not reduced.

Form D0555 Lump Sum Hardship Claim requires the pensioner to indicate how long they expect their changed circumstances to continue to affect their ability to repay at the current rate and how much they think they can afford to repay. Additional information is also sought on the pensioner's fortnightly income and expenses in order to give the delegate an indication of their capacity to repay. If the delegate is satisfied the criteria are met, they may determine in writing that the advance payment deduction can be reduced or stopped. The delegate must specify a period and a review should be set for the end of that period to resume the higher deduction rate.

Assessing hardship – issues to consider

The following is relevant when assessing severe financial hardship:

• consider whether temporary additional expenses are reasonable, unavoidable and disregard any that are not, and
• the pensioner's new financial circumstances will determine whether the current rate of repayment would cause severe financial hardship.

Review of hardship

At any time that a determination is in force for an advance payment deduction to be decreased or stopped because of severe financial hardship, a delegate can either vary that determination and increase deductions or can revoke the determination so that deductions return to their original level. A new determination to vary or revoke the reduction can only be made if the delegate is satisfied that the pensioner would not suffer severe financial hardship as a result. The decision to vary or revoke must be in writing. In the case of variation, the amount of the deduction cannot be larger than the deduction amount set prior to hardship being determined.